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a. An investor currently holds the following portfolio: Amount Invested 8,000 shares of Stock A $16,000 Beta = 1.3 15,000 shares of Stock B $48,000

a. An investor currently holds the following portfolio:

Amount

Invested

8,000 shares of Stock A $16,000 Beta = 1.3

15,000 shares of Stock B $48,000 Beta = 1.8

25,000 shares of Stock C $96,000 Beta = 2.2

The investor is worried that the beta of his portfolio is too high, so he wants to sell some Stock C and add Stock D which has a beta of 1.0 to his portfolio. If the investor wants his portfolio to have a beta of 1.72, how much Stock C must he replace with Stock D?

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